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Will Viasat's Non-Core Asset Sale for Core Focus Aid the Stock?
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Viasat, Inc. (VSAT - Free Report) recently completed the divestiture of its Energy Services System Integration (SI) business to a U.S.-based private investment firm, MAG Capital Partners, for an undisclosed amount. The move aligns with Viasat's ongoing strategy to actively manage its portfolio by divesting non-core assets and enhance its financial position by focusing on core business growth.
VSAT’s Strategic Restructuring
Viasat acquired the SI business through the purchase of RigNet, Inc., a leading provider of networking solutions and specialized applications, in 2021. The division provides a range of services, including engineering design, procurement services, shop assembly, factory acceptance testing and ongoing support for telecom systems used in critical infrastructure projects.
Post-divestiture, approximately 80 employees linked with the business will join the newly formed company, Nessco, highlighting a seamless transition without planned facility closures. This move underscores Viasat’s commitment to sharpen its focus on creating innovative global communication solutions that serve diverse sectors, including communication, defense and governments worldwide.
VSAT’s Focus on Core Business Growth
Viasat’s Satellite Services business is progressing well, with key metrics, including ARPU (average revenue per user) and revenues, showing impressive growth. ARPU is growing due to a solid retail distribution network, which accounts for a rising proportion of the high-value and high-bandwidth subscriber base.
Furthermore, the growing adoption of in-flight Wi-Fi services in commercial aircraft is proving conducive to business growth. Viasat’s impressive bandwidth productivity differentiates it from conventional and lower-yield satellite providers that run on incumbent business models. It has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, which makes it believe that mobile broadband will act as a profit churner with a significant improvement in in-flight connectivity revenues.
The company recently collaborated with Defense Innovation Unit (“DIU”) to provide critical networking capabilities for the U.S. Department of Defense’s Replicator initiative. Under the DIU's Opportunistic, Resilient & Innovative Expeditionary Network Topology project, it will deliver a cutting-edge Multi-Domain Uncrewed Secure Integrated Communications (“MUSIC”) architecture, which leverages software-defined networking (SDN) to ensure resilient connectivity for autonomous systems.
The MUSIC solution is an advanced configuration of Viasat’s NetAgility SDN that facilitates secure and reliable communication for autonomous systems operating in complex, contested environments. By utilizing multiple transport pathways, the solution enables secure command and control communications, ensuring that information can be shared efficiently across disparate systems in support of mission-critical operations.
Viasat is also ramping up investments in developing its revolutionary ViaSat-3 broadband communications platform, which will have nearly 10 times the bandwidth capacity of ViaSat-2. These satellites will be capable of covering one-third of the world, including the Americas.
The ViaSat-3 platform will help form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed Internet and video streaming service. In a nutshell, Viasat has garnered enough economics of scale and scope to serve vast emerging markets in South America, Africa, the Middle East and Western Asia.
Will VSAT Stock Benefit From the Divestiture?
The divestiture marks a big consolidation in the satellite telecommunication industry, as companies aim to reorganize their portfolios and align with shifting market conditions and technical changes. The transaction is expected to bolster Viasat’s diverse portfolio of markets and products and provide greater resilience to the company’s overall financial performance.
VSAT’s Stock Price Performance
Shares of Viasat have plunged 67.6% over the past year against the industry’s growth of 28.1%.
Image Source: Zacks Investment Research
VSAT’s Zacks Rank and Key Picks
Viasat currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry have been discussed below.
The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.
Ubiquiti Inc. (UI - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.
The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
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Will Viasat's Non-Core Asset Sale for Core Focus Aid the Stock?
Viasat, Inc. (VSAT - Free Report) recently completed the divestiture of its Energy Services System Integration (SI) business to a U.S.-based private investment firm, MAG Capital Partners, for an undisclosed amount. The move aligns with Viasat's ongoing strategy to actively manage its portfolio by divesting non-core assets and enhance its financial position by focusing on core business growth.
VSAT’s Strategic Restructuring
Viasat acquired the SI business through the purchase of RigNet, Inc., a leading provider of networking solutions and specialized applications, in 2021. The division provides a range of services, including engineering design, procurement services, shop assembly, factory acceptance testing and ongoing support for telecom systems used in critical infrastructure projects.
Post-divestiture, approximately 80 employees linked with the business will join the newly formed company, Nessco, highlighting a seamless transition without planned facility closures. This move underscores Viasat’s commitment to sharpen its focus on creating innovative global communication solutions that serve diverse sectors, including communication, defense and governments worldwide.
VSAT’s Focus on Core Business Growth
Viasat’s Satellite Services business is progressing well, with key metrics, including ARPU (average revenue per user) and revenues, showing impressive growth. ARPU is growing due to a solid retail distribution network, which accounts for a rising proportion of the high-value and high-bandwidth subscriber base.
Furthermore, the growing adoption of in-flight Wi-Fi services in commercial aircraft is proving conducive to business growth. Viasat’s impressive bandwidth productivity differentiates it from conventional and lower-yield satellite providers that run on incumbent business models. It has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, which makes it believe that mobile broadband will act as a profit churner with a significant improvement in in-flight connectivity revenues.
The company recently collaborated with Defense Innovation Unit (“DIU”) to provide critical networking capabilities for the U.S. Department of Defense’s Replicator initiative. Under the DIU's Opportunistic, Resilient & Innovative Expeditionary Network Topology project, it will deliver a cutting-edge Multi-Domain Uncrewed Secure Integrated Communications (“MUSIC”) architecture, which leverages software-defined networking (SDN) to ensure resilient connectivity for autonomous systems.
The MUSIC solution is an advanced configuration of Viasat’s NetAgility SDN that facilitates secure and reliable communication for autonomous systems operating in complex, contested environments. By utilizing multiple transport pathways, the solution enables secure command and control communications, ensuring that information can be shared efficiently across disparate systems in support of mission-critical operations.
Viasat is also ramping up investments in developing its revolutionary ViaSat-3 broadband communications platform, which will have nearly 10 times the bandwidth capacity of ViaSat-2. These satellites will be capable of covering one-third of the world, including the Americas.
The ViaSat-3 platform will help form a global broadband network with sufficient network capacity to allow better consumer choices with an affordable, high-quality, high-speed Internet and video streaming service. In a nutshell, Viasat has garnered enough economics of scale and scope to serve vast emerging markets in South America, Africa, the Middle East and Western Asia.
Will VSAT Stock Benefit From the Divestiture?
The divestiture marks a big consolidation in the satellite telecommunication industry, as companies aim to reorganize their portfolios and align with shifting market conditions and technical changes. The transaction is expected to bolster Viasat’s diverse portfolio of markets and products and provide greater resilience to the company’s overall financial performance.
VSAT’s Stock Price Performance
Shares of Viasat have plunged 67.6% over the past year against the industry’s growth of 28.1%.
Image Source: Zacks Investment Research
VSAT’s Zacks Rank and Key Picks
Viasat currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry have been discussed below.
Celestica Inc. (CLS - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 17.44%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.
Ubiquiti Inc. (UI - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.
The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.